Exam 12: Special Property Transactions

Basil,who is single,purchased a house on May 10,1981,for $175,000.During the years Basil owned the house,he installed a pool at a cost of $20,000 and built a new garage at a cost of $20,000.On October 12,2014,Basil sold the house for $518,000.Basil paid a sales commission of $24,600 and legal fees of $400 connected with the sale of the house.What is Basil's recognized gain on the sale of the house?

A barn with an adjusted basis of $125,000 was destroyed by a tornado on March 5,2014.On May 15,2014,the insurance company paid the owner $150,000.The owner reinvested $170,000 in another barn.What is the basis of the new barn if non-recognition of gain from an involuntary conversion is elected?

The City of Greenville condemned 300 acres of Kayla's farmland.Kayla's land was worth $250,000 and her basis was $62,500.In payment to Kayla,the city gave Kayla 500 acres of similar land.An appraisal indicated that the land Kayla received was worth $265,000.What is Kayla's recognized gain or loss on the involuntary conversion and what is her basis in the land received?

Richard's business is condemned by the state on July 10,2014,as part of a plan to add a highway loop around the city.His adjusted basis in his business is $500,000.He receives condemnation proceeds of $610,000 on August 30,2014.He purchases another business for $575,000 on September 15,2014. a.What is Richard's realized and recognized gain or loss? b.What is Richard's basis in the new business?

Gain realized on a like-kind exchange is excluded from income in all of the following circumstances except:

When a loss is disallowed under the wash sale rules,

Ko exchanges computer equipment (five-year property)with an adjusted basis of $9,000 for a business auto (five-year property)worth $6,000.Ko also receives cash of $5,000.What are the recognized gain or loss and the basis of the new auto?

A warehouse with an adjusted basis of $125,000 was destroyed by a tornado on April 15,2015.On June 15,2015,the insurance company paid the owner $195,000.The owner reinvested $170,000 in a warehouse.What is the basis of the new warehouse if non-recognition of gain from an involuntary conversion is elected?

If a taxpayer excludes the gain on the sale of his personal residence and,within two years,sells a second residence,he or she can exclude (up to $250,000 for a single taxpayer):

Libby exchanges a building she uses in her rental business for a building owned by Randy which she will use in her rental business.The adjusted basis of Libby's building is $80,000 and the fair market value is $125,000.The adjusted basis of Randy's building is $40,000 and the fair market value is $125,000.What is Libby's recognized gain on the transaction and her adjusted basis in the building she receives?

If married taxpayers live in their personal residence for more than two years,the couple can exclude a maximum of $250,000 on the gain from the sale of the residence.

If one spouse sells a home and excludes the gain on the sale,the gain on the sale of a residence by the other spouse is:

Louis,who is single,sold his house in St.Louis at a gain of $240,000 on June 8,2014.He properly excluded the gain.He took another job in Memphis.He purchased a new home in Memphis for $225,000 on August 5,2014.Louis was transferred by his employer to New Orleans.Louis sold his Memphis house at a $36,000 gain on October 15,2014.What is Louis's recognized gain on the Memphis house?

With an involuntary conversion,what is the time limit to purchase replacement property?

Depreciation recapture on an asset sold using the installment method is recognized ratably as payments are received.

Lee sells equipment (basis $10,000)to related party,Lee Construction Inc.,for $6,000.The $4,000 loss is:

All of the following taxpayers can use the installment method to report gains from the sale of assets except:

The property to be received in a like-kind exchange must be identified within:

Julia exchanges a machine used in her business with Elvira for another machine.The basis of Julia's old machine is $100,000,FMV is $132,000,and she gives Elvira cash of $28,000.Elvira's basis in her machine is $140,000 and the FMV is $160,000.What,if any,gain is recognized on the transaction and what is the adjusted basis of the property received by Julia and by Elvira?

Jasmine sold land for $250,000 in 2014.The land had a basis of $118,000 and she incurred selling expenses of $10,000.Jasmine received $50,000 down in 2014 and will receive five additional annual payments of $40,000 each.How much income will Jasmine recognize in 2015 when she receives the first additional payment of $40,000?